Kingfisher Airlines may lose airport slots

Privately run airports, such as those in Delhi and Mumbai, have already started giving key slots held by Kingfisher Airlines to other airlines, making its planned, phased restart even more difficult. Photo: Hindustan Times

Updated: Thu, Jan 03 2013. 11 57 PM IST

Mumbai: State-run Airports Authority of India (AAI) has warned Kingfisher Airlines Ltd, grounded since October, that it will start taking away space allotted to the troubled airline at airports across the country if it fails to submit a “functional” plan by mid-January.

The development comes as lenders are scheduled to meet representatives of Kingfisher Airlines’ management on Friday in Bangalore and rival Jet Airways (India) Ltd said it was in talks with Etihad Airways for a possible investment. If a deal takes place, it would close the door on the prospects of the United Arab Emirates (UAE) airline picking up a stake in Kingfisher. An overseas investment would help bail Kingfisher Airlines out of its current predicament.

Privately run airports, such as those in Delhi and Mumbai, have already started giving key slots held by Kingfisher Airlines to other airlines, making its planned, phased restart even more difficult.

Kingfisher Airlines planes stopped flying on 1 October following a strike by engineers and pilots who hadn’t been paid since March. Subsequently, the Directorate General of Civil Aviation (DGCA) suspended the licence of the airline.

It submitted the restart plan to DGCA late last month. This involves a likely March resumption with seven planes, moving up to 21 in four months, with a fund infusion of Rs.652 crore from parent UB Group.

AAI chairman V.P. Agrawal said the plan submitted to DGCA was not a “functional” one.

“AAI has to recover its dues from Kingfisher Airlines. If it is not submitting a concrete functional plan by mid-January, we will evacuate the assets of the airline from airports across the country. We also have plans to expedite check bouncing case against Kingfisher Airlines,” Agrawal said.

“We have not decided to pull the plug. A decision would be taken post the meeting. We cannot attend a meeting with a preconceived notion. We will listen to the airline management first,” the SBI executive said, requesting anonymity.

A senior official at the ministry of civil aviation was sceptical about Kingfisher’s prospects and the commitment of promoter Vijay Mallya to the airline’s resumption.

“The revival plan submitted with the DGCA does not say much,” the official said on condition of anonymity.

Mallya has not furnished any guarantees from the UB Group that it will inject the required Rs.652 crore, he said.

“Kingfisher Airlines has not paid its employees for the last several months. And it needs to give three months’ training to its pilots before restarting operations. Bankers are not willing to lend additional funds to Kingfisher Airlines. In fact, the plight of Kingfisher Airlines has led to a situation where other airlines too are not getting funds from banks,” he added.

Mumbai International Airport Pvt. Ltd has given Delhi-Mumbai slots, critical for a domestic airline, to another private airline, according to a senior airport official. “More slots would be given to other carriers if the airline is not clearing dues to airports,” he said on condition of anonymity.

Such slots enable an airline to use the full range of infrastructure necessary to arrive or depart at a specific date and time. Kingfisher Airlines owes around Rs.50 crore to Mumbai airport.

Delhi airport is still holding Kingfisher Airlines’ slots as the airport has greater capacity.

“In October, the DGCA asked us to not to give away the slots of Kingfisher Airlines assuming it will submit a revival plan. As of now, we have no plan to evict the airline,” a senior Delhi airport executive said. The airline owes approximately Rs.36 crore to Delhi airport.

Kingfisher Airlines dropped 2.51% to Rs.14.78 on Thursday on BSE Ltd, while the benchmark Sensex rose 0.26% to 19,764.78 points.

Jet Airways rose 4.7% to Rs.606.85 amid announcement of its talks with Etihad. The airline told BSE it was in discussions with Etihad Airways for a potential investment, indicating it might be closer to a deal with the West Asian airline than Kingfisher Airlines.

“The discussions are in progress, but no terms have been firmed up at present,” Jet Airways informed the stock exchange. “Various structures are being explored by the legal and commercial teams, and care is being taken to ensure that all the Indian regulatory requirements are fully complied with.”

Jet Airways and Kingfisher Airlines were in the race for an investment from Etihad, the national airline of the UAE, after the government allowed foreign airlines to invest in Indian aviation.

Jet Airways, India’s second largest airline by passengers carried, said in its statement that it could not at this stage offer a “firm time line as to the progress of these negotiations, considering the complexity of transnational transactions such as this, and the complexity of the legal requirements of the regulatory structure”.

It added that no regulatory approvals had been sought as it had not yet reached an agreement with Etihad.